Sol's Weekly Real Estate News

Hello All,?

What a week right!?! Although it really isn't that different from any other week, there are some trends to identify and account for. Sol's Weekly Real Estate News is an effort to advance real estate knowledge and provide market conditions that affect REI (Real Estate Investing) activities.?I encourage you to add your comments and post what you'd like more insight on for next week's post.

Week in review:?

As we see a decline in home sales due to high-interest rates, it's important to remember that there are very simple remedies to aid in moving your flips. As a new homebuilder myself, I am seeing people ease into the new home market with more caution. This is normal and totally expected as all good things must come to an end, it's up to you to identify how to move past this challenge, luckily you don't have to do it alone. On top of that, we are getting closer to higher gas prices and other petroleum-based products due to OPEC and other Petrol Producing countries reducing production and output starting in November. Not to worry, there is always a solution to the never-ending madness of the world.?

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1. First things first, let's talk interest rates:?

Do any of you remember the Owner Finance craze prior to the pandemic? No, that's okay, we do. With the cost of homes and the cost to borrow money to buy said homes, you may want to turn to an alternative form of lending that allows you to cover your cost and off-load properties in a 6-12 month timeframe. I know what you're thinking "6 to 12 months! This man is on something!" Remember that the owner financing method allows you to set a rate that can compete with what lenders are giving out. Of course, there is risk and a host of variables that could end with a foreclosure, but there are a few methods that could mitigate this risk. First would be using an underwriting company for your buyer, second would be setting your downpayment to a 25%-30% down situation, and third is to utilize a debt servicing company (almost like a property manager for your new mortgagee).?

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Within the conversation for rates, there is another alternative that offers speed and may even boost your comps in the area. One of the most successful seller tactics we have used to quell interest rates is the infamous seller/builder credit. This allows me to credit a portion of the purchase price to the interest rate of the buyer, allowing me to sell a home at market price without lower pricing (most of the time).?This is what Joel Allen , an investor, and lender from San Antonio had to say regarding seller concessions.

“There is some sentiment in the lending community that interest rates will reduce a bit over the next 12-24 months.? Coupled with home sellers now being willing to entertain the possibility of providing some seller concessions, I'm seeing a renewed interest in temporary rate buydowns. This provides temporary interest rate relief for the home-buyer, with the hope they'll be able to refinance to a lower rate in the next 1-2 years.”

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2. OPEC, what the heck?

Are you already paying a lot for gas? It's about to get WAY more costly (if you can believe it). This is because the countries that produce the world oil supply will be cutting production by a significant number of barrels (roughly 950,000 daily). This will translate into North American companies upping their drilling and production activity in Texas, Alaska, and Montana, just to name a few. I will be speaking specifically about Midland-Odessa in Texas, it is the largest community that contributes to the success of oil production in our state, yet it is largely ignored when oil production is down. I can only imagine the amount of work that will be needing BTR housing, extended-stay hotels, and single-family housing. Now I know what you're saying "What about when they leave?!?". There are a few hundred thousand people that live in this area of TX, and most of them live in homes that are outdated and falling apart with no new inventory to come. When and if the field workers leave (statistically most stay if they can find a place to purchase) you will have a population that can purchase and rent homes to keep your investments cash-flowing and protected from fluctuation. Moral of the story? Better get in now while you can.?

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For more information on these topics, feel free to connect. Solomon Floyd